BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Tuesday, 22 October, 2002, 20:37 GMT 21:37 UK
Brussels under fire for ruling
My Travel aircraft
The court had already overturned Brussels' Airtours decision
The European Commission has faced harsh criticism following a court ruling to overturn its ban on French group Schneider Electric's takeover of rival Legrand.

It is the second time this year that the Commission has had a merger decision overruled by a European court.

Analysts said the court decision on Schneider was a surprise and could pave the way for a swift review of the way Europe looks at merger proposals.

But Schneider itself said it was now unsure about its plans for Legrand, having already agreed to sell the company.

U-turn


The court is strongly saying that there was a major problem in the way the commission dealt with the case

Naboth van den Broek, Stibbe

Schneider, a French electrical goods group, bought 98% of rival Legrand last October.

But the European Commission ordered Schneider to sell the stake because of competition issues.

The investigation was carried out by the EU antitrust division under the leadership of Mario Monti.

But his decision has now been overruled by the European Court of Justice, which decided the analysis of the deal by Mr Monti's team "was vitiated by errors and omissions".

The court's criticism is the second blow to the Commission in a few months.

In June, the court said the Commission's decision to stop travel group AirTours, now called MyTravel, from buying rival First Choice had been a mistake.

Naboth van den Broek, a lawyer at the Dutch law firm Stibbe said: "Now it is clear that this not a one-time problem. The court is strongly saying that there was a major problem in the way the commission dealt with the case."

Setting a precedent

Lawyers said the latest court ruling had prompted calls for Europe to create a separate competition body to authorise the Commission's merger decisions.


This is more of a moral, personal victory for chief executive Henri Lachmann

Julian Beer, Enskilda Securities

This would bring it in line with procedures in the US.

"That is one possible way to inject a truly independent body into the process," said Alec Burnside, a competition partner at lawyers Linklaters.

On Friday, the European Court is due to hear the case of packaging giant Tetra Laval, which is appealing against a ban on its acquisition of the rival French group, Sidel.

Lawyers say there is now a strong chance that this decision will also be overruled.

"This would mean the commission would have lost three consecutive merger cases. That has got to be cause for some serious reflection," said Charles Stark, a partner at Wilmer, Cutler & Pickering.

Moral victory

Schneider meanwhile said it was reviewing its options for Legrand.

The electrical group has already agreed to sell the group to investment groups Wendel Investissement and Kohlberg Kravis Roberts.

Schneider logo from website
Schneider could now look at other acquisitions

Schneider would be selling its 98% stake at a loss of 2.7bn euros (1.7bn), but to change its mind would cost it 185m euros in penalty fees.

Analysts said it was unlikely to proceed with the sale.

"This is more of a moral, personal victory for chief executive Henri Lachmann than a commercial success," said Julian Beer, an analyst at Enskilda Securities.

But Schneider is seeking financial compensation from the Commission.

A spokeswoman for Mr Monti said the court ruling would speed up a review of how antitrust cases are dealt with.

She said the review, which is now underway, had already "pointed to weaknesses in decision-making and economic analysis".

See also:

06 Jun 02 | Business
11 Dec 01 | Business
27 Nov 01 | Business
11 Jul 01 | Business
03 Jul 01 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes